Central Asia news

Uzdunrobita managers convicted, MTS subsidiary now owned by government

18.09.2012 15:39 msk

Ferghana

The Tashkent city criminal court sentenced four Uzdunrobita (an MTS Uzbekistan brand) staff to fines and three years in prison, and has also issued the judgement that the company’s assets are to be handed to the government on 17 September, reports RIA Novosti.

The court case against the Uzdunrobita employees began on 27 August. Four top managers of the company were accused of violating tax and currency laws, embezzlement and acting without a licence.

MTS said several times that the accusations have no basis, and that the investigation and court case violated legal norms.

In particular, according to a Fergana source, prosecution witnesses mixed up their testimonies, arrested Uzdunrobita staff and the company’s other employees were threatened and underwent strong psychological pressure which was aimed to get them to give self-incriminating testimony. MTS said that questioning sessions often took place at night, defence lawyers did not always have access to their clients, and investigators threatened one of the company’s staff that they will “search his home and find drugs”.

MTS has successfully operated in Uzbekistan since 2004 after acquiring the Uzbek communications company Uzdunrobita. The situation changed in June 2012, when Uzbekistan’s authorities accused it of illegally using more than 250 base stations, improper use of funds, embezzlement, using illegal structures to draw money out of the company and dodging taxes, as well as regional subsidiaries lacking licenses.

An international search warrant was issued for the company’s Director General Bekzod Akhmedov and several top managers were arrested. On 17 July, Uzdunrobita’s license was suspended for ten days, following an order for the Uzbek Agency of Communication and Information (UzACI), and the Tashkent Commercial Court prolonged the suspension for three months.

On 6 and 7 August 16 territorial administrations of Uzbekistan’s anti-monopoly authorities announced that Uzdunrobita had violated anti-monopoly laws, as well as laws defending consumer rights and advertising, and claimed more than $80 million from the company. MTS announced that the accusations do not correlate with the factual circumstances of the company’s work in Uzbekistan and said that the company was ready to appeal the decision. On 13 August, the Tashkent Commercial Court supported UzACI’s statement on annulling all of Uzdunrobita’s licences.

MTS announced that it received 16 reports of inspections by the Uzbekistan tax authorities. Despite the fact that the last inspection into the company’s activities ended in February 2012, and did not uncover any significant violations, the results of the re-inspection were a claim of over $1 billion against Uzdurobita brought by the tax authorities, which is the total amount invested by MTS in developing the business in Uzbekistan.

In response to news of the sentence, the Moscow MTS office sent out a press-release saying that “many legal violations in the investigation, the formal approach to presenting evidence during the court case, the tight deadlines in the court hearing, and the illegal refusal to involve the company as a party in the case to defend its rights and interests, all point to this the malicious nature of this case, designed to gain ownership of MTS assets and business in Uzbekistan.”

MTS does not agree with the unjust sentence given to four Uzdunrobita staff. Accusations made against them in the court process have still not been proven.

MTS reserves the right to use all available legal means, first and foremost at the international level, to recover the losses borne as a result of the illegal actions taken against the MTS subsidiary in Uzbekistan, including but not limited to by specific Uzbek officials.”